CREDIT RISK ASSESSMENT (CRA)

INTRODUCTION

Assessment of the risks in a

proje t ! "nit It is one of the parameters an# a$so a #e i#in% fa tor for takin% e&pos"re on a ompan' (ri in% of the Cre#it fa i$it' is $inke# to CRA of a "nit

Intro#" tion ont#)**

CRA mo#e$s are +ase$,II

omp$iant an# meets the re-"irements of Interna$ ratin% +ase# (IR+) Approa h

MODE.S O/ RATIN0
I*
Se tor 1ise 2 , CRA for Non,tra#in% se tor , CRA for Tra#in% se tor

II* Amo"nt 1ise 2

, Re%"$ar Mo#e$ (for $oans 3 4*55 r*) , Simp$ifie# Mo#e$ (for $oans 5*64 r* to 4*55 r*)

T7(ES O/ RATIN0S
I* +orro1er Ratin% 8 II* /a i$it' Ratin%

+ORRO9ER RATIN0
, /or the Compan' :ase# on a"#ite#
finan ia$s not more than ;6 months o$# (for e&istin% "nits 1ith minim"m one f"$$ 'ear operations) , /or a ne1 ompan'< it is :ase# on the proje te# finan ia$s 1ith f"$$ 'ear operations , On e rate#< it is =a$i# for one 'ear

+ORRO9ER RATIN0 > Risks o=ere#

Re%"$ar ;* /inan ia$ Risk > ?4 marks (64 for ne1 ompan') 6* +"siness 8 In#"str' Risk 65 marks (A5 for ne1 ompan') A* Mana%ement Risks > ;4 marks (B4 for ne1 ompan') Simp$ifie# /inan ia$ Risk > @5 marks (A4 for ne1 ompan') +"siness 8 In#"str' Risk 65 marks (B5 for ne1 ompan') Mana%ement Risks > ;5 marks (64 for ne1 ompan')

+ORRO9ER RATIN0
, B* Co"ntr' Risk (for e&porters) >
Ne%ati=e marks re$atin% to risk fa tor the o"ntr' arries > insi%nifi ant to Ci%h Risk , Ne%ati=e Marks for D"a$itati=e fa tors< i*e*< stat"tor' #"es an# ontin%ent $ia:i$ities impa tin% TN9 of the "nit , +on"s (oints (ma&* 4) for E&terna$

/INANCIA. RISK (ARAMETERS

(ARAMETERS ;* TO. ! TN9 6* C"rrent Ratio A* ROCE B* Retaine# (rofit ! Tota$ Assets 4* (+DIT ! Interest ?* (AT ! Net Sa$es @* Net Cash A r"a$ ! Tota$ De:t MARKS A5 ;4 65 ;5 65 65 ;4

/INANCIA. RISK (ARAMETERS ont#))*

E* A=era%e 'ear to 'ear %ro1th in net sa$es F* /inan ia$ /$e&i:i$it' ;5* 0ro"p Risk ;;* /ore& Risk ;6* /"t"re (rospe ts ;A* 0ross A=era%e DSCR an# Co$#in% perio# Total ;5 4 4 4 65 65 ;F 4

+USINESS 8 INDUSTR7 RISK (ARAMETERS

;* Competition an# Market Risk 6* In#"str' O"t$ook A* In#"str' C' $i a$it' B* Re%"$ator' Risk 4* +"siness En=ironment 6*4 6*4 ;*5 ;*4 5*4

+USINESS 8 INDUSTR7 RISK (ARAMETERS > ont#)**

?* Te hno$o%' 8 ="$nera:i$it' to Te hni a$ han%e @* G"$nera:i$it' to ma ro,e onomi en=ironment han%e E* A ess to Reso"r es (Inp"t profi$e) F* User ! (ro#" t profi$e ;5* Capa it' "ti$isation an# f$e&i:i$it' in operation ;*4 ;*5 6*5 6*5 ;*5

+USINESS 8 INDUSTR7 RISK (ARAMETERS > ont#)**

;;* Consisten ' in -"a$it' ;6* Resear h 8 De=e$opment ! Inno=ation ;A* Distri:"tion net1ork ;B* Comp$ian e of En=ironment Re%"$ations Total ;*5 ;*5 5*4 6*5 20

MANA0EMENT RISK (ARAMETERS

;* Inte%rit'
6* Tra k Re or# ! Con#" t of A A* Mana%eria$ Competen e ! Commitment ! E&pertise B* Str" t"re 8 S'stem 4* E&perien e in the In#"str' ?* Strate%i Initiati=es o"nt 6*5 6*5 6*5 ;*5 ;*5 5*4

MANA0EMENT RISK (ARAMETERS, ont#)*

@* .en%th of Re$ationship 1ith the +ank E* Cre#i:i$it' F* A:i$it' to mana%e han%e ;5* S" ession p$an ! ke' person ;;* A#heren e to o=enants of san tion Total ;*4 ;*5 ;*5 ;*5 6*5 15

+ORRO9ER RATIN0 > ENTR7 +ARRIERS

Units sho"$# not s ore Hero in
theset1o parameters< i*e*< , IComp$ian e of En=ironmenta$ Re%"$ationsJ (for non,tra#in% a ti=it') , IInte%rit'J (:oth for tra#in% an# non, tra#in% a ti=it') If a "nit s ores Hero in an' of the a:o=e parameters< then the proposa$ 1o"$# :e #e $ine#

/ACI.IT7 RATIN0
- Separate rating for each facility - Each time, a facility is sanctioned, Facility
Rating is assessed - As many facilities, so many Ratings

/ACI.IT7 RATIN0 (ARAMETERS

;* INDUSTR7
, In#"str' hara teristi an# Distan e to Defa"$t , In#"str' Re o=er' s ore 6* 0eo%raph' A* Unit Chara teristi s -.e=era%e ! Enfor ement of o$$atera$ - Safet'< =a$"e an# e&isten e of assets A*5 A*5 5*? B*5 B*5

/ACI.IT7 RATIN0 (ARAMETERS > ont#)*

B* Ma roe onomi on#itions -0D( %ro1th rate 2 Impa t of :"siness -Inso$=en ' $e%is$ation in the j"ris#i tion -Impa t of s'stemi ! $e%a$ fa tors in re o=er' -Time perio# for re o=er' 4* Tota$ se "rit' ;*5 ;*5 ;*5 ;*5

@5*5

/ACI.IT7 RATIN0 (ARAMETERS > ont#)*

?* Cre#it D"a$it' of the +orro1er (+orro1er Ratin% s ore o"t of ;5) Total score Ne%ati=e Marks for -De:t!E-"it' -0ross A=%* DSCR -Tenor of /a i$it' -C"rrent Ratio FACILITY RATING SCORE ;5*5 100.0 ,6*5 ,6*5 ,;*5 ,4*5